Engineering course teaches ethical entrepreneurship

Imagine you are the founder and CEO of an online trading platform. A software engineer has pushed code that is causing thousands of trades to be misdirected. It’s havoc with customers incurring losses by the minute. If you remain online, customers will lose money. If you shut the system down, customers – including those unaffected by the technical glitch – won’t be able to trade, leading to possible losses here too.

What do you do?

This was a scenario Stanford lecturer Jack Fuchs posed to students taking Engineering 148/248: Principled Entrepreneurial Decisions, a course that shows students how values and principles can help them manage high-stakes situations they will face in their careers.

For the next 30 minutes, the students had a lively debate about what they would do, what those actions might cause, how to deal with panicked customers, and how to regain their trust. They ultimately agreed to temporarily shut the system down.

The situation was one of many conundrums Fuchs presented to students over the quarter.

For example, in another class, students were asked to imagine they worked at a social gaming startup where they had developed a highly effective methodology to maximize user engagement. Profits surged and team morale was high. But it came at a cost: it turned out changes they were implementing were incredibly addicting to its users. Fuchs asked them what they would have done differently.

“We put students in difficult situations where they are presented with principles from different types of leaders and different types of companies to help them develop principles of their own,” said Fuchs. “Students develop their own ethical compass by studying these constructs.”

Articulating a set of principles

As well as being an instructor, Fuchs is also an entrepreneur, a board member for private companies around the world, an operating partner with Blackhorn Ventures, and an angel investor. One thing he’s found helpful throughout his career is having a set of principles, which he defines as “actionable tenets for making both life and business decisions.”

“Principles help inform how you and your team will act in a variety of situations,” said Fuchs, who worked closely with Tom Byers, faculty director at STVP, the Stanford Engineering Entrepreneurship Center, to develop the course. Fuchs and his co-instructor, Scott Sandell, a venture capitalist and adjunct lecturer of management science and engineering, took inspiration from a class on dilemmas and decisions instructor and entrepreneur Mark Leslie teaches at the Graduate School of Business (GSB) and Ray Dalio’s book, Principles.

While principles are inspired by values – which tend to be broad and can be articulated in one or two words like “trustworthy” and “customer-centric” – principles are more specific and actionable. For example, a principle based on those values might be “when we set an expectation with a customer, we own it.”

Principles vary from person to person, and also between organizations and industries, cultures, and communities. They are iterative, evolving over time as people learn more about themselves and from their experiences.

Students are provided frameworks to help them develop a broad set of well-articulated principles and they put those principles to the test through role-play exercises and workshops.

But it’s the case studies that put students into high-stakes situations that fuel much of the learning.

As Fuchs and Sandell guide the class through each case study, they encourage students to think about what values and principles they would bring to the situation. “You know the students are getting it when they use principles as the basis for class comments,” says Fuchs. “Students actively disagree with each other, but on a principles level, as we hope they will with their colleagues in their careers.”

Ian Singer, a master’s student in Sustainability Science and Practice at the Stanford Doerr School of Sustainability, found this approach helpful as he honed his own values and principles with his classmates when he took the course in winter quarter.

“We’re not just saying ‘Here’s how we should handle a crisis because that’s the ‘best’ way to handle it,’ ” said Singer. “Best can mean lots of different things to lots of different people. Instead, we start with the principles we all agree on. Then we can productively disagree on how to handle the situation, debating what’s most aligned with the principles and values of the people or company we are discussing.”

For Singer, discussing situations through this lens has been a powerful learning experience.

“As the cases prove, there are seldom clear right and wrong answers in the real world, and even less often is there clear consensus within a team. By elevating the debate to alignment with values and principles, you are forced to embrace nuance and therefore disagreement.”

Inspired by real people and real situations

Each case study has a protagonist inspired by people who are also the guest speaker that week.

For example, while the situation at the electronic trading platform Fuchs posed to students was fictional, it was loosely based on real events: In 2020, the online financial services startup Robinhood experienced multiple days of outages. Moments after their class discussion, Robinhood CEO and Stanford alum Vlad Tenev, ’08, joined the debate and talked with students about the challenges he found himself in and how they shaped how he manages the company today.

Students also heard from people like Aaron Levie, CEO and co-founder of file-sharing company Box, and Michelle Zatlyn, COO, president, and co-founder at Cloudflare, an internet security provider – among many others.

For Emily Redmond, a current senior and co-term student in computer science and human-computer interaction as well as a leader of Stanford Women in Business, hearing from senior executives first hand – particularly women – was both inspiring and insightful as she thinks about what she wants to bring to her own career. Redmond was particularly struck by what Hilarie Koplow-McAdams, who has led multiple commercial organizations, shared about rising through the ranks of the technology industry.

“As a new professional, it was affirming to hear Hilarie focus on the early stages of her career and what it truly feels like to be in your 20s, making substantial strategy decisions for the first time that feel like they will impact the next 30 years of your career,” said Redmond.

Koplow-McAdams also talked about how her beliefs informed her work style, which also resonated with Redmond who found similarities with Koplow-McAdams’ principles and her own.

“She spoke about her journey realizing how important it is to develop relationships with not only your higher-ups like mentors and management, but also your peers, both at school and beyond in the working world,” said Redmond. “Learning from my peers has been one of the highlights of the course. A principle of mine that emerged from Hilarie’s reflection and Jack’s discussion-based teaching style is to foster relationships with my peers, and I’m grateful for learnings from my classmates that have broadened my worldview and inspired me, for example, to prioritize joy in my career.”

Principled Entrepreneurial Decisions is taught once a year during winter quarter. This was the fifth time the class was offered.